Is Your New Year's Resolution to Quit Your Lousy Job?

The stronger your savings and investment plan, the sooner you can leave your "it pays the bills" job for one you love.

Do you love your job? I mean, really and truly love it to the point where it's what you'd be doing with your time even if you didn't need the money? If not, you're not alone. According to a survey by eFinancialCareers, a mere 32% of finance professionals love their jobs -- leaving some 68% who don't.

That's a shockingly high proportion of people who both don't really love what they're doing and should be in about the best position to fix that problem. After all, they're in the financial business, so they probably know a thing or two about how money works and should be pretty well situated to figure out how to make it work for themselves.

When it comes right down to it, there are really only two reasons for showing up to work: either you absolutely love what you're doing, or you need that paycheck. And if you're among those working because you need your paycheck, it's time to think about what you'd need to do to quit. Indeed, it's time to pledge to yourself that 2013 is the year you go out and do something about it. After all, if you're going to spend 40 to 60 hours a week somewhere, shouldn't it be somewhere you enjoy being?

Before you give your notice...Of course, as easy as it is to dream about quitting, actually going out and doing something about it is far more difficult. Those paychecks have a pesky way of stopping after you submit your resignation, as does any insurance coverage your job may provide you. If you're working for your paycheck, you need something to replace it before you submit your resignation. Otherwise, you're very likely to wind up in a much worse place than the job you're leaving.

You'll need another source of income, and you'll very likely need another source of health insurance, as well. For health insurance, there's at least some path forward. Thanks to COBRA and HIPAA, you're allowed to continue buying coverage from your former employer's group plan for up to 18 months after leaving.

After exhausting that coverage, you can convert to individual health coverage, regardless of your preexisting conditions. Also, if Obamacare survives financially, that law means taxpayers will likely subsidize your individual insurance costs as early as 2014.

Still, regardless of whether you're on your own or at least somewhat subsidized, health insurance costs are only a portion of what you'll have to cover. You'll need the basics like food, clothing, shelter, climate control, and transportation, along with the extras that make life worth living. All that takes cold, hard cash, and to get that cash, you'll either need another job or a pretty substantial nest egg.

What's your dream job?If you're going to leave one job for another, make sure the job you're going to is a step in the right direction, toward where you really want to be. If it's not what you want to do with your life, it's probably not worth giving up one lousy job just to wind up with another. You might be able to job-hop once or twice, but if you make a pattern of it, you'll get yourself a reputation as unreliable, likely making that dream job that much harder to get when it does become available.

And if that dream job doesn't pay as well or doesn't have as good a benefit package as the one you're in now, you have to be financially prepared to make the leap. That means either lowering your costs of living, having another paid job, or tapping your nest egg to help cover your expenses.

Two reasons that nest egg mattersSay you find what looks like your dream job but discover that it pays $12,000 a year ($1,000 a month) less than what you're making now. Can you afford to take that kind of a pay cut? If you've been building a nest egg, there are two reasons it's a lot easier to say yes to that pay cut.

For one, assume you've been able to sock away $600 a month -- about $20 a day. That savings is money you can give up to pursue your dream job, without any real impact on your lifestyle. So that $1,000-a-month gap has already become a mere $400 a month, without any additional effort on your part.

For the second, if you invest that money well, you can then turn around and spend it down to cover your costs. $400 a month spending works out to $4,800 a year. Based on the 4% rule, you can cover that with a $120,000 nest egg. That's not enough to retire on, but if that's all that's keeping you from your dream job, it's certainly achievable.

Indeed, as the table below shows, the more you're able to save of that gap each month, the easier it is to cover that income gap:

If Your Monthly Savings Is...

Then Your Annual Gap Is...

Which Will Take You This Long to Cover Earning 10% Annually

...Earning 8% Annually

...Earning 6% Annually

...Earning 4% Annually

$1,000

$0

0.0 years

0.0 years

0.0 years

0.0 years

$800

$2,400

4.9 years

5.1 years

5.3 years

5.6 years

$600

$4,800

9.8 years

10.6 years

11.6 years

12.8 years

$400

$7,200

15.6 years

17.4 years

19.7 years

22.9 years

$200

$9,600

24.1 years

27.6 years

32.5 years

40.3 years

Source: Author's calculations.

Perhaps best of all, if you're able to sock away enough­, then you don't even need to give it another thought. You can walk away, right away, to that job of your dreams, even if it brings with it a pay cut, simply because you were able to save and invest enough to pursue your passion.

Is 2013 the year you start or the year you reach your dream?It's up to you. If you're able to save enough, you can make 2013 be the year you walk away from the job you work for the money to grab the job you work because you love it. If not, then at least make 2013 the year you start saving to cover that gap so that you can reach your dream job. Because if you never get started, you'll never reach your goal.

Author

Chuck Saletta has been a regular Fool contributor since 2004. His investing style has been inspired by Benjamin Graham's Value Investing strategy. Chuck also can be found on the "Inside Value" discussion boards as a Home Fool.